美联航CEO：需求强劲，票价仍有上涨空间

Before we get into the results, I just wanna take a step back because if we were back in the middle of March and I was sitting here and you were telling me what you were about to do, I'd be like, Kirby's gone nuts because energy prices have gone sky high. People are gonna stop flying. They just won't pay up. Scott, can you take us behind the scenes how you and the company navigated that energy shock over the past few months?

You know, thanks for having me this morning. And and, really, it is pretty remarkable. You look kind of at the full year at what happened. Fuel prices are up $6,000,000,000 compared to what we thought at the start of the year, and that compares to the best year in history where we made a little under 5,000,000,000. And the fact that we're sitting here today raising guidance and talking about at least having a shot at growing earnings on a year over year basis is a remarkable testament to the strength of demand, and the demand is and the economy are really strong, but also that United Airlines has had the right the brand loyal United Next strategy that we had is the right strategy.

And the people of United are doing a better job than any airline anywhere in the world at implementing that and taking care of customers. And we've been able to get to attract enough of those brand loyal customers to United that we've mostly been able to overcome the fuel price spike. So I'm really proud of the team for what they've done in a tough environment to to make it feel just normal if you're flying on United or if you're working on United.

Scott, I remember earlier this year, we were talking about how you expected demand destruction as prices got, higher. You didn't see that, neither did other people. And you said you were surprised that you didn't see more demand destruction. Are you starting to see any signs of that or at least, customer fatigue in pricing? No. We aren't. Demand is is incredibly strong for us. In fact, you know, our fourth quarter yields are booked 14 points higher at this point in time than they were at the same point in time for three q.

Corporate demand so far in July is up 30%. We really haven't. And I think as you sort of take a step back from it and look at what's really happened, it's air travel share of the travel pie got really, really small coming out of COVID. And even with fares where they are today, air travel is 13 per the prices are 13% lower in real terms than they were pre COVID, while hotels are up significantly, cruise lines and rental cars and everything else is up.

So And I think we're just returning to a normal historic share of the travel pie for air travel. So the co total cost of the trip is staying consistent with inflation. But after under indexing to airlines, it's now over indexing to airlines. And so the total cost of trip isn't changing nearly as much as just airfares returning to the normal historical relationship that we've had there to to the total travel pie. Oil prices have continued to inflect upward as a result of a new, resurgence in the conflict in The Middle East.

And I'm just wondering, is there more room to go with respect to responding to those extra oil price costs with higher, higher fares going forward? Well, you know, like I said, airfares are down 13% from, in real terms, from pre COVID. Short answer is yes. And in fact, there's been another fare increase this week. There were five or six when oil prices first spiked, and then when oil came down, you know, they sort of paused, but there was another one this week.

And so I is strong. The consumer is strong. And it really is like, our whole overall cost base is not just airfares, but our cost base with airport fees and maintenance and labor, those have actually gone up even more. And so it really is just a case of recovering all the inflationary cost increases that have happened, you know, and recovering from the COVID trough, in pricing. We were joking, Scott, earlier that the airline industry also is an AI trade, for a lot of different reasons, but in part because of the business travel and how much has picked up.

How much do you see that being driven by all the capital markets activity that we keep talking about with the big banks, the idea that everyone needs to fly around, meet their clients as they prepare for these incredible fundraising exercises? Well, I think it's probably more translated to just what it means for the overall economy as opposed to, you know, just specific the the AI trade. But the economy is strong, and and part of it is AI and all the build out that's happening with AI.

But, you know, I as I said, you know, 30% up in business travel so far in July. Business demand is really strong. The US economy, is is really strong, and and we're a beneficiary of that. One thing that we've seen is increasing creativity when it comes to how you approach different premium offerings, the latest being that in premium economy or economy plus, the middle seat gets blocked out, and there's a shared table.

I mean, is there something different about the creativity being used recently, whether it's different types of offerings, different segmentation, more specific offers to different slices of the consumer base? We really are trying to build a great brand loyal airline nose to tail. We're folk we're investing heavily in premium, but we're investing just as heavily in in the economy cabinet. We recognize that today's, you know, basic economy customer is tomorrow's Polaris customer, and we're just trying to build a great airline for everyone.

You know, Starlink is an example. The relax row, which is in economy is, I think, one of the coolest things we've done in the one time. You know, an extra you know, a a blocked middle seat, in coach is just another example. And, you know, United, we really are trying to just try everything that we can, to make the experience better for customers and and believing that if we do that, we will have a brand loyal customer base that does really well when times are good, but it's also worth proving how resilient we are in times where something like, you know, this oil price spike happens.

I mean, the fact that we've got oil prices up $6,000,000,000 year over year, and we have a legitimate shot at growing earnings on a year over year basis, is just a remarkable testament to what it means to invest for the customer and get customers to want to fly us to decommoditize this industry. Really proud of the United team for what they've done to execute on that strategy. Scott, more people in New York might be more willing to fly you when you get back to JFK.

Is that still in the works for next year? That is. We're very excited about it. Looking forward to getting back to JFK. Looking forward to once we're back to JFK, we'll be the only airline with Starlink on the airplanes. For those of you that care about high true high speed Wi Fi, we'll be the only ones Yeah. In in those markets. Looking forward to it. Scott, I love the idea to relax row. When I was a teenager, young in my twenties flying, when I saw an empty row of three seats and the plane taking off, I'd never been more excited.

And as soon as you got up to about 35,000 feet, I was on it trying to lie down and move the armrest to make this work. Scott, have you had that idea for a long time? I've wanted to do it. In fairness, Air New Zealand is one that came up with it, and I've wanted to do it ever since they did it, and now we are. I'm excited about it. By the way, I spent a a number of trips when I was young and non revving doing the same thing.

When we get to be our age, it's a lot harder to do that on those three seats. And so the relax row is gonna be a lot better. And plus, you can hang out with your kids, and it's it's it's a of all the stuff we've done, I personally think it is one of the coolest things we've done. It's gonna be great for kids and families.